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JAKE TAPPER, CNN HOST: Welcome back to THE LEAD. I'm Jake Tapper. The Politics Lead now. They are famously deep pocketed Republican donors that Democrats are trying cast as political bogeyman. And now, Senate Majority Leader Harry Reid is actually proposing to change the United States Constitution to try to stop the Koch brothers. He wants to limit how much they and everyone else can spend in federal elections.

Republicans call the move demagoguery and radical. But it's all part of a Democratic strategy for the mid-term elections to make the Koch brothers the face for swing voters of the Republican opposition of income inequality and of a deck stacked against the average American. CNN chief congressional correspondent, Dana Bash has the story.

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DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT (voice-over): Flooding the air waves this election year Democratic ads featuring two men not on any ballot, not even politicians.

ANNOUNCER: Brought to you by out of state billionaires the Koch brothers.

SENATOR HARRY REID (D), MAJORITY LEADER: No conscience. As un- American as anyone that I can imagine.

BASH: Other high-profile Democrats are doing it too.

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES OF AMERICA: The Koch brothers and their friends bringing in millions and millions and millions of dollars.

UNIDENTIFIED MALE: They can't possibly cross the Koch brothers.

BASH: Democratic sources tell CNN it's a carefully crafted strategy to make the Koch brothers the 2014 election villains. The personification of the rich manipulating the political system, bank rolling a GOP agenda to get richer.

REID: The Koch brothers seem to believe in an America where the system is rigged to benefit the very wealthy.

BASH: How wealthy are they? "Forbes" magazine puts Charles and David Koch as the fourth richest men in America with a fortune of more than $41 billion. Their oil, gas and textile conglomerate, Koch Industries, makes products we use every day, Dixie cups, toilet paper, stain master, even Lycra. Their business is privately held. The Koch brothers own 84 percent of Koch Industry shares.

DAVID KOCH, CO-OWNER, KOCH INDUSTRIES: I believe in fiscal responsibility and supporting American business.

BASH: Their libertarian politics comes from their father, Fred Koch, a chemical engineer whose experience working in the Soviet Union instilled an aversion to big government. Charles and David spent tens of millions of their personal wealth to push those anti-big government views. But exactly how much they donate is impossible to track. It's cloaked in secrecy. They fund groups not required to disclose donors. Groups that work to impact federal, state and even municipal elections.

(on camera): How dark and secretive is it really?

DAVE LEVINTHAL, CENTER FOR PUBLIC INTEGRITY: They are very secretive in the way they operate politically. They have a very vast and wide network of non-profit organizations, and limited liability companies.

BASH (voice-over): It's a huge web of roughly three dozen conservative groups funded at least in part by the Kochs. One freedom partners acts as a hub of sorts funded by the Kochs and 200 other like-minded businessmen. Freedom Partners raised over $250 million in 2012. Tim Phillips is the president of Americans for Prosperity, one of the most prominent Koch-backed groups.

(on camera): Can you see how people might look at the unprecedented amount of money you're spending, not knowing who the money is coming from and just assume that it's coming from dark evil places.

TIM PHILLIPS, AMERICANS FOR PROSPERITY FOUNDATION: They are not exactly hiding, Dana. If you think about it. David is on our board of our foundation. We'll follow the law and shield the privacy and the first amendment rights of the folks who support us.

BASH: Democrats say the idea that the money is going to oppose government regulation and environmental protection because of economic principle is laughable. Democrats say it's all about making them richer. To counter that Koch allies argue ethanol subsidies help Koch Industries but lobby against it. We asked for an interview with Charles or David, but the media adverse brothers wouldn't talk to us. A spokesman suggested their long-time friend and former employee.

NANCY PFOTENHAUER, FORMER PRESIDENT, AMERICANS FOR PROSPERITY: I would describe them as people who are driven by integrity, humility --

BASH (on camera): So this sort image of these two fat cats with a puppet string --

PFOTENHAUER: It's not reality.

BASH (voice-over): Those who know Charles and David Koch say they have a long term goal of infusing America with their libertarian ideals, but each has a personal passion. For Charles Koch, a soft spoken intellectual who lives in their home town of Wichita, Kansas, it's higher education pumping millions in to colleges and universities around the country mostly to push free market economics to college students.

By contrast, David Koch is in New York and lives the life of a big city billionaire. He donates tens of millions to medical research, hospitals and even a liberal bastion the arts, giving $35 million to bring a dinosaur exhibit to the Smithsonian and restoring the Ballet at Lincoln Center, which bares his name. Their names may be on buildings and on Democrats lips --

REID: These two brothers are trying to buy America.

BASH: -- but they remain largely silent.

(on camera): Why don't they come back and hit back and defend their character?

PFOTENHAUER: I think that instinct is somewhat mediated by the nastiness and viciousness of these attacks that have real ramifications from the standpoint of security.

BASH: They won't be specific but Koch sources insist they've had significant death threats. Still Charles and David Koch don't just cling to privacy because of security concerns, they are trying to limit public scrutiny even as Democrats make them the faces of fat cat influence.

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TAPPER: And Dana Bash joins me now. Dana, the Koch brothers have this organization that they founded and they support Americans for Prosperity. They are planning on spending $125 million on the mid- term elections. Put that into context. Can that have an impact?

BASH: A huge impact. We can't even wrap our minds around the kind of impact until it's actually probably going be more than $125 million. To put it into perspective that's more than the parties, Republicans and Democrats, their campaign arms are likely going to spend to get their candidates elected on a federal level. Again, this is money that they are spending that comes from anonymous donors.

We don't know where it comes from. They will do it across the board, television ads. They are already on the air. Field operations, voter I.D., they are going to get the list for voters out there. They are acting in large part like political parties.

TAPPER: They are of course Democratic and liberal super PACs and organizations as well. Let's talk about this constitutional amendment that Harry Reid brought up this week. Is that a real thing? Could they actually get a constitutional amendment or is this just about painting them as bogeyman the Koch brothers?

BASH: Mostly about painting them as bogeyman. You know how difficult it is to pass a constitutional amendment. It is incredibly difficult and you need in the best of times bipartisan votes on that. And there's no way this is even close to bipartisan, the idea of getting constitutional amendment out there. No question just another attempt by Democrats to keep out there the idea that the Koch brothers as you say are the villains.

What's so interesting about the Democrats strategy is they've gotten some push back. Jon Stewart made fun of Harry Reid, for example, and I've heard from Democratic sources that they almost don't care because their whole goal is to get the Koch brothers, to get them in the whole concept of people's minds as these rich fat cats that are the problem with Republicans and the problem with the party. So it really is raw, raw politics.

TAPPER: Dana Bash, thank you so much. We'll continue to follow the money as this election season heats up. Next week, we'll take a look at some of the big money funding Democrats this year.

Also in politics today a day after testifying before Congress about the national disgrace at the U.S. veterans hospitals involving excessive wait times today the undersecretary for health in the VA is resigning. That's him next to Secretary Shinseki after a CNN investigation unveiled these ridiculously long wait times. As many as 40 veterans have died while waiting and waiting for appointments.

If Petzel is the one falling on the grenade for his department it's not nearly good enough for the Republican who chairs the House committee on veteran affairs, Congressman Jeff Miller. He released a statement just in the last few minutes calling Petzel's resignation, quote, "The pinnacle of disingenuous political doublespeak. Petzel was already scheduled to retire in 2014. President Obama has already announced his intention to nominate Petzel's replacement, so characterizing this as a "resignation" just doesn't pass the smell test."

Coming up, General Motors ordered to pay the maximum fine allowed by law for a problem they knew about for 10 years and never reported, but why won't any of the victims' families see a cent.

Plus, he's an NFL big shot who won so much at the Kentucky derby, he was reportedly handing out hundreds to strangers. But now Churchill Downs says that money wasn't all rightfully his.

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TAPPER: Welcome back to THE LEAD. I'm Jake Tapper. The Money Lead now, the federal government today a slapped a $35 million fine on General Motors for failing to fix faulty ignition switches in its cars. GM knew about the problem for ten years before they finally issued a recall in February of this year. The recall impacted 2.6 million cars including models that have been tied to at least 13 deaths. The CEO of GM, Mary Barra, was hauled before Congress where lawmakers accused GM of a cover up. Barra said the company still investigating what happened. That's about all she said. While the $35 million fine is a record civil penalty and the max allowed by law the families of the men and women who lost their lives will not see a single cent of it.

GM's cash goes directly into the coffers of the U.S. Treasury. Joining me now from New York, CNN correspondent, Poppy Harlow. Poppy, let's start with this figure, $35 million, that's less than 1 percent of GM's annual profits. I mean, this is a rounding error.

POPPY HARLOW, CNN CORRESPONDENT: Authors exact words that the head of the DOT, used today in this announcement. I don't know if GM would agree, but that's what the government is saying. They are less than 1 percent of the annual earnings of this company over the last 12 months. Here's tissue. That's the maximum they can fine under law. They are pushing Congress to move that fine way up to $300 million. But for now that's all they can do.

This is a civil penalty for the ignition switch defect that cost at least 13 lives if you hit the ignition switch with your knee or going over a bump, the car could turn off. That means airbags may not inflate among other problems. Again GM even acknowledging that cost at least 13 lives. The issue here, Jake, as you know, is that they knew about this back in 2004 and did not tell anyone about it or fix it until this year. This settlement is a civil settlement.

The criminal investigation by the DOJ is very much still ongoing, the FBI is still investigating. Let me read you what the CEO of General Motors, Mary Barra, said about this. Today she said, quote, "We have learned a great deal from the recall. We will now focus on the goal of becoming an industry leader in safety. We will emerge from this situation a stronger company."

I spoke extensively with General Motors on the phone today. Their press team. I asked what else is ahead. You made a number of internal changes. You doubled the amount of investigators you have. Are there more changes ahead? They said yes there are more internal changes ahead.

Nobody has been fired as a result of this. Two engineers have been put on paid leave but at this point, Jake, today in this announcement from the government they said that this went all the way up to executives. What we want to know is who.

TAPPER: Poppy, when can families of the victims expect to see any money?

HARLOW: They are not going to get any of this money. If you look at Toyota as an example in that unintended acceleration recall, big recall a few years ago, they settle with the Justice Department on those criminal charges for $1.2 billion. So if the DOJ does find GM liable, GM could face a big penalty to settle any criminal charges.

Also a very important name, Ken Feinberg, he is an attorney who deals with victim compensation after 9/11. The BP oil spill, after the Boston marathon bombing he's been hired by GM, he's in-house there now working on dealing on that issue of victim compensation. If they are going to pay out victims, who they will pay, how much. The tricky thing this company went through bankruptcy in 2009.

So technically they are not liable for costs pre-2009 unless they are found criminally liable because that's the old GM versus the new GM. So a lot of big questions. I did talk to the head of the center for auto safety today and he said he thinks the fines should be unlimited. He thinks that possible jail time should be considered here if GM is found criminally liable.

TAPPER: Poppy Harlow, thank you so much. When we come back he's blowing away the box office competition. What would the military do to fight off a real life Godzilla? The Air Force has a plan for that. That's next.

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TAPPER: Welcome back to THE LEAD. I'm Jake Tapper. In national news, to his supporters he was the liberal lion.

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SENATOR TED KENNEDY (D), MASSACHUSETTS: The work begins anew. The hope rises again and the dream lives on.

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TAPPER: That was the legendary Senator Ted Kennedy speaking at the 2008 Democratic National Convention. He passed away exactly one year later. Now a tribute comes to a man who spent four decades in the Senate. Construction work is on Edward M. Kennedy Institute in George Chester, the south of Boston. A 65,000 square-foot facility, which will include a full size replica of the U.S. Senate chamber.

And Victoria Kennedy, co-founder of the Edward M. Kennedy Institute and the widow of the late senator joins us now. Such an honor to have you here. Thank you so much. Tell me what's the point, what's the purpose of the Edward M. Kennedy Center, what will people do there?

VICTORIA KENNEDY, CO-FOUNDER, THE EDWARD M. KENNEDY INSTITUTE: It's so great to be here with you. I'm so excited to talk about the Edward M. Kennedy Institute. First of all this institute for the Senate is something that Teddy started talking about, conceived of, planned for, starting about 12 years ago.

TAPPER: Really?

KENNEDY: Really. And he loved education. He loved history, and he loved the United States Senate. And he really felt that the way to get people engaged in understanding their government was by getting the home understand the United States Senate. And he wanted a place where people could in an interactive way, in a hands on way learn about the Senate.

TAPPER: There's going be a replica of the U.S. Senate Chamber --

KENNEDY: A representation.

TAPPER: So people like you and me who have never been on that floor --

KENNEDY: Exactly. I've never been able to walk on the Senate floor. Not being a senator, not being a staff member and as it should be. And it's a place for people to be able to understand that Senate experience. It's totally interactive. As soon as visitors come in to the institute they will have a little orientation and they will get a hand-held device a Google hand-held device where all of our exhibit, all of the Senate experience, the visitor experience is interactive.

If you're uncomfortable with an interactive experience there's docents to take you through. But it's getting people to learn the way they learn today. You get history in a way that's lively, interactive, but it's history and the present all at the same time. You'll have a feed for what's happening in the Senate today. You'll get a chance to comment on what's happening in the Senate today. But in the most exciting part of the experience you'll have a chance to have a vote of the day.

TAPPER: You get to vote. This is right next to the JFK library, right?

KENNEDY: Right next door. Every single visitor will have a chance to go into the chamber, call a vote of the day, here the pros and cons of a particular issue and have a chance to cast their vote and see how the vote came out.

TAPPER: It sounds fascinating and I hope we get to come up when it opens. I do want to ask you one other question, if I can. You are a member of a very prestigious dynasty in American politics. There were a couple of years there when there was no Kennedy in Congress. Now Joe Kennedy III is there. I wonder about all this talk of the 2016 election the Clintons and Bushs and how maybe there shouldn't be dynasties ruling this country, et cetera, what do you think as a member of one of the preeminent American political dynasties?

KENNEDY: I don't think of it in terms of dynasty I'm thinking of it in terms of those who are qualified to lead this country. Joe Kennedy is a super star. I'm his biggest fan. I think he's fantastic. And I am delighted to see more people who want to get into office whatever their last name.

TAPPER: Edward M. Kennedy Institute opens in 2015 and we hope to be there and thank you so much for coming here. Glad to meet you.

KENNEDY: Thank you so much. It's great to meet you.

In the Sports Lead, unlike his last three Super Bowls, Wes Welker was a big winner at the Kentucky Derby. Last time we saw Welker. He was holding stacks of cash and handing out hundreds to total strangers. Not all of the money the Denver Broncos receiver was doling out was rightfully his. The racetrack says someone with Welker's group was overpaid on a bet by $14,000.

They want their money back. It's not clear how much Welker bet. Welker a horse owner today said sorry he's not giving the cache back. That's it for THE LEAD. I turn you over to Wolf Blitzer. He's next door in "THE SITUATION ROOM." Have a great weekend.